SAN FRANCISCO (MarketWatch) — U.S. stocks closed higher Wednesday after the Federal Open Market Committee indicated a slower pace of rate hikes, following the removal of the word “patient” from its policy statement.

The S&P 500
SPX, +0.59%
jumped 25.14 points, or 1.2%, to close at 2,099.42, with all 10 sectors finishing higher on the day, led by energy and utilities. Just before the Fed’s statement, the S&P 500 was down 8 points.

Trading within a 400-point range on the session, the Dow Jones Industrial Average
DJIA, +0.72%
surged 227.11 points, or 1.3%, to close at 18,076.19, after trading down 101 points just before the statement’s release. Twenty-eight of the Dow’s 30 components finished higher, with Caterpillar Inc.
CAT, -0.77%
and Chevron Corp.
CVX, +0.56%
among the biggest gainers.

The Nasdaq Composite
COMP, +0.50%
surged 45.39 points, or 0.9%, to close at 4,982.83, after being down about 17 points before the statement.

The Fed’s “dot plot,” or survey of what Fed officials think rates should be at certain times, indicated a slower rise in rates, as the median dot for the end of 2015 declined to 0.625% from 1.125%.

Even though the word “patient” was removed, new cautionary language in the Fed statement is setting up for a first rate hike in September, said Dan Greenhaus, chief strategist at BTIG, in emailed comments. The Fed said it would raise rates when “further” improvement in the labor market has been seen, Greenhaus noted.

“What’s important about this part of the statement is that it clearly says the FOMC is looking for ‘further’ improvement, meaning the economy and labor market has not yet met whatever criteria necessary to warrant a rate hike,” he said.

Bob Baur, chief global economist at Principal Global Investors, said the Fed wants to maintain the most flexibility as it attempts to lift rates.

The Fed wants “some flexibility to be able to raise rates fairly soon,” Baur noted. “But they don’t want to be locked in,” to a specific timetable, he added.

The Fed action resulted in stunning moves in the euro
EURUSD, -0.5086%
which jumped to $1.10 versus the dollar late in trading, while the central bank moves took the wind out of what had been a rapid climb in the value of the dollar compared with its main rivals. The dollar sank against a basket of six main currencies
DXY, +0.47%
on the heels of the Fed’s policy statement, which indicated that it will move cautiously in lifting key interest rates for the first time in nearly a decade.

WSJ market wrap: March 17, 2015

(1:05)

U.S. stocks fell Tuesday, as the Federal Reserve kicked off a policy meeting where the central bank is expected to signal that tighter monetary policy is on the horizon. Apple rose on news of the launch of a web TV service.

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